Hotel Industry Blog

Should you discount your rates in a downturn?

By Des O'Mahony | On Mon, January 26, 2009

By making obvious cutbacks you will only damage your reputation with the people who matter most
Customers’ expectation of price may change in a downturn, but their expectations of service levels don’t drop. Lowering rates may be one response to weakening occupancy but the lower income generated may result in lower service levels which in the longer term can damage your brand - according to a recent article on Caterer Search on the pros and cons of lowering rates: “by making obvious cutbacks you will only damage your reputation with the people who matter most”.

While many strongly advocate reducing rates, there are other avenues to explore.

It’s all about value, not price
In discussions with our hotels, Bookassist has advocated the necessity to look at the mix in what you have on offer, showing more value, rather than across-the-board discounting of price which can damage not only an individual hotel brand but an entire sector. Hotels should “look at added-value options to hold price, such as including breakfast free of charge, and focus on increasing the overall revenue they get from clients during their stay”, according to Caterer Search. Bookassist’s advanced add-ons facility, allowing for upsell directly at the time of booking, is an invaluable tool for this approach to value rather than just price.

For a perspective from the British Hotelier of the Year conference, see: http://www.caterersearch.com/

Labels: pricing, marketing, brand

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